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Apollo to Merge Momentive Performance, Hexion

By

Jodi Xu

Sept. 13, 2010 1:07 p.m. ET

Private-equity giant Apollo Management LP is merging chemical companies Momentive Performance Materials Holdings Inc. and Hexion LLC, with Apollo co-founder Josh Harris saying the time is right in making the combined entity "a global player in the specialty materials space."

"Once the transaction is completed, the combined company will be able to provide customers with a full range of specialty chemicals and materials and will have significant operations in virtually all major world markets," added Harris.

The combined company would have some $7.5 billion of annual revenue and adjusted earnings before interest, taxes, depreciation and amortization of $1.24 billion. The merger is set to close Oct. 1 and the resulting company would be called Momentive Performance. It will have 117 production facilities and more than 10,000 workers.

The transaction does not require any additional financing and is expected to result in "significant" synergies. However, the companies' capital structures will remain separate.

Hexion Chairman and Chief Executive Craig O. Morrison will lead the combined company, with current Momentive President and CEO Dr. Jonathan Rich joining the board. Hexion's financial chief, William H. Carter, will also hold that roll for the post-merger company.

The deal comes amid a rebound this year in the chemical space after a woeful start to 2009 as industrial companies clamped down on production in the immediate aftermath of the financial crisis. Hexion, whose results have been publicly reported, said last month it swung to a second-quarter profit as revenue and margins jumped amid 30% demand growth.